Ezion' 3Q profits took a 69.1% nose dive

It's under pressure to maintain a strong balance sheet.

Ezion Holdings reported a 7.4% YoY drop in revenue to US$79.8m and a 69.1% drop in net profit to US$9.4m (S$13.2m) in 3Q16, mainly due to lower gross profit margin of 17.5% in the quarter vs. 21.3% in 2Q16 and 29.0% in 3Q15.

OCBC Investment Research notes that a reason for this was the deployment of additional service rigs which could have included mobilisation costs.

According to the research house, results were within expectations, as management had previously guided a lacklustre 3Q16.

As Ezion is modifying a few more of its existing service rigs and taking delivery of two or three new units by the end of 2017, managing its cashflow and gearing is imperative, said OCBC Investment Research.

"As such, it may 1) dispose at least another existing service rig, 2) delay or cancel a few of its past committed projects that no longer make economic sense, and 3) invite potential JV partners to co-own assets," it said.